Lottoland boss: We’re a disruptor Interview
HOW would you like to gamble on national lotteries all over the world from the comfort of your living room? What’s more, you could even double the size of the jackpot if you wanted. That is the offer from Lottoland, the controversial gambling firm led by entrepreneur Nigel Birrell.
What’s the catch? Well there isn’t one, except a proportion of your money does not go to good causes.
That is why Birrell’s Gibraltarbased operation has enraged Camelot and has prompted the British Government to investigate whether it should be banned from offering bets on the National Lottery’s weekly EuroMillions draw.
Birrell naturally rejects the criticism. Any difficulties the National Lottery operator is facing with how much money it raises are its own fault, he declares.
‘Our research shows we have zero effect on the amount raised for good causes – the real issue is Camelot’s own lack of growth.
‘The Government should at least hang on for a few years and assess what effect we’re having, rather than banning it as a kneejerk reaction based on what the monopoly operator wants.’
So how does Lottoland’s model work? Rather than buying actual lottery tickets, Lottoland’s customers are placing a bet to see if their numbers come up in the draw of their choice. If they do, they’ll win the jackpot amount. Or they can double their stake and double their winnings.
The winnings are paid either directly from Lottoland’s own funds or are paid out by insurers, which include Lloyds of London.
So far Lottoland has paid out €300million (£270million) in jackpots and a further €400million on instant win games, including €23million, €14million and €3million in the space of six weeks last year. In the UK a truck driver from the West Midlands won £1.8million on the Polish lottery in 2015.
Lottoland has used Chris Tarrant as a brand ambassador to promote its business in the UK.
But some of its adverts have fallen foul of regulators.
To meet licensing regulations Birrell must ensure customers know they are betting with Lottoland and not the official lottery operator. But it was recently fined £150,000 by the Gambling Commission for a radio advert that failed to comply.
Birrell admits: ‘Every now and then an advert slips through, even though it was approved by our lawyers and the advertising authority. But we’re educating our staff so it doesn’t happen again.’
Meanwhile, Camelot has been suffering from declining sales. Earlier this year it announced it was carrying out an internal review of the business after sales plunged 9 per cent, leading to a fall in the amount raised for good causes.
But Birrell, who describes his firm as a ‘disruptor’ comparable to Uber or Netflix, insists Camelot’s difficulties have nothing to do with Lottoland. He says: ‘We’re the hair on the pimple on the cow’s backside – we’re really small compared with Camelot, which has been operating for decades without competition, and hates anyone else coming on to the market.
‘Camelot’s previous management used us as a bit of a scapegoat for the problems they’re having within their own organisation. It’s easy to blame the new entrant, but the reason its sales are declining is totally down to domestic issues, such as changing the nature of draws.’ Camelot did face a backlash from some customers in 2015 when it doubled the cost of the Lotto draw to £2 and added ten balls, leading to bigger jackpots, but making it harder to win.
And Birrell insists Lottoland does make voluntary contributions to charity. He says: ‘We do give to good causes, such as the Lottoland Foundation in Germany, but clearly not on the same level or with the same structure as Camelot. ‘We are a private company and private companies are generally in it to make a profit. We accept that the lottery concept is associated with giving back to the community.
‘But we’re a new entrant and have yet to make a significant profit, so you can’t start giving money unless you start making money. If the Government takes away one of our key markets the chance of us making a profit goes down further.’
While Lottoland’s annual turnover of €300million is indeed dwarfed by Camelot’s £7billion, it has just signed its six millionth customer and has seen turnover double yearly. And there are a huge number of markets to pursue. On Lottoland’s website gamblers can choose from 30 draws worldwide, including the US’s PowerBall (current jackpot £182million); Italy’s SuperEnalotto (£67million); and Brazil’s Mega-Sena (£26million).
Birrell says: ‘While you and I might love to win £10million, that amount doesn’t seem to get the heart pumping as much as you’d imagine – £100million is when people really start to get excited.’
Lottoland is barred from offering bets on Camelot’s Lotto draw but can offer a punt on the equally popular EuroMillions draw.
‘The Government is keen to prevent us offering EuroMillions to Brits,’ says Birrell ruefully, referring to the consultation being carried out by the UK’s Department for Digital, Culture, Media and Sport. That review is due to report this autumn.
Birrell grew up in Cornwall, working first as a lawyer, then as an investment banker ‘before it was a dirty word’. After 11 years, he joined the board of HIT Entertainment, the firm behind children’s TV shows Thomas The Tank Engine and Bob The Builder. It was sold to private equity firm Apax Partners in 2005 and Birrell moved to Gibraltar to work with Party Gaming, an online gambling firm.
He was just thinking about moving on when he met the people from Lottoland. ‘It was serendipitous,’ says Birrell, who joined as a nonexecutive director, becoming chief executive in May 2014.
Birrell, who divides his time between the UK and Gibraltar, is ‘sport mad’ and spends his time golfing, sailing and playing the occasional game of football.
Gibraltar voted overwhelmingly to stay in the EU, but this rocky outcrop is a potential flashpoint in Brexit negotiations.
On this Birrell is bullish, at least on the status of the Rock. He says: ‘I can’t believe that Britain would even debate its sovereignty.’
As for the business outlook, Birrell says Lottoland would consider getting a licence in a EU country if necessary to continue operating in the bloc, but the biggest issue is likely to be ease of crossing the border, as most of his 350 staff live in Spain.
For the time being Birrell has no plans to move the business elsewhere.
‘Gibraltar is the capital of gaming,’ says Birrell. ‘A third of all online gaming comes out of Gibraltar and all the bluechip gaming companies are here, such as Ladbrokes Coral, William Hill, 888, Paddy Power Betfair – it’s a good crowd to be involved with.’
Already operating in ten countries, the group has just launched in Australia. One challenge for Lottoland is the number of smaller global groups copying its model.
‘It’s very flattering as long as they do it properly, pay out winners, get insurance and so on,’ he says.
But he can’t resist another dig at Camelot: ‘I welcome competition from new entrants rather than people hiding behind a monopoly.’
We accept the lottery is associated with giving back to the community
You and I might love to win £10m... but it’s £100m when people start to get really excited